• by dave.b , Max Kalehoff , July 20, 2007

Can marketers “buy” buzz? Yes, sort of!

A group of my Nielsen colleagues from BuzzMetrics (where I work), BASES and ACNielsen released this week an experimental study seeking to understand the relationship among online buzz, media spend and actual sales during product launches in the consumer packaged goods (CPG) category.

The result? Marketing strategies that separate advertising and paid media from pure word-of-mouth tactics can be severely misguided. In fact, high blog interest, or buzz, around new product launches is very tightly linked to paid media spending.

While I rarely address my direct work in this column, I’m going to break the rule just this once to chime in on this work, which evaluated across several subcategories nearly 80 new CPG products launched in the U.S. between 2005 and 2006. Here are highlights:

• Advertising Is Best Predictor of Buzz: After analyzing blog buzz volume, ad spending, purchase intentions and actual product sales, researchers found that the best predictor of buzz for newly launched CPG is a large advertising budget.
• Greater Media Spend Equals Greater Buzz: On average, the top 10% of products with the most buzz spent nearly $20 million on paid media for the launch. In contrast, the companies that generated the next 40% of blog buzz spent an average of $15 million; the companies that generated the bottom 50% spent an average of only $5 million.
• A Few Products Dominate CPG Buzz: Not all CPG subcategories and products generated buzz at the same level. In fact, 10% of brands accounted for 85% of total CPG buzz in the study. Over-the-counter (OTC) drug brands have higher buzz, partly driven by consumers’ higher level of involvement with them. Edgy brands were also among the top 10% of products with the most buzz.
• Buzz Precedes Sales Peaks: Buzz tends to occur very early in relation to a new product launch, with peaks in buzz preceding peaks in sales two-thirds of the time in the launches studied.
• Buzz Enhances Sales Forecasting Accuracy: For the select products that generate substantial buzz, this study provided the first-ever evidence that buzz volume can positively influence sales. In a regression-based sales forecasting experiment, incorporating actual buzz levels resulted in a meaningful accuracy improvement to forecasting models, by as much as 20%.
• Brand Uniqueness Prompts Buzz: Beyond media spend and distribution, category familiarity (as indicated by higher purchase frequency) and product distinctiveness show value when attempting to anticipate or predict buzz.

While this work prompted more questions than answers, it confirms the inextricable link between traditional marketing strategies and word-of-mouth, or buzz. Let’s be honest: while traditional marketing and media models have been slowly eroding and mutating, there’s been a lot of hype around standalone “alternative” strategies attempting massive viral dispersion and reach, often positioned as a valid replacement for traditional media. But the fact is that traditional media strategies are not dead, and buzz tactics can’t necessarily live on their own in a vacuum. Neither is right or wrong, but they are both part of a complex communications and customer landscape. The exposed linkages in this work underscore the critical need for smart, holistic communications planning, coupled with seamless, integrated execution and comprehensive effectiveness measures.

But this work also points out opportunities high up the brand value chain. My colleague Kate Niederhoffer, one of the study’s authors, said, “The CPG industry should challenge itself to bring more innovative products to market, cultivated with more innovative marketing -- the buzz will follow.” She correctly noted that while CPG products are often presumed “everyday” items, lacking in distinction and therefore propensity for buzz, there are some exceptions to the rule, as evidenced by brands like Red Bull, Altoids, Crystal Pepsi and Viagra.

I hope this work prompts more foundational work across our industry. Advertisers need more insight into the linkage among marketing, media, consumer behaviors and expression, influence and sales. And among the practitioners, I hope to see more marketing and communications informed by these emerging principles in this new age of buzz and consumer-generated media.